Turkish Monetary Policy Eased
August 4, 2011
Turkish monetary policy had been tightened in late 2010 and early this year via a mix of higher reserve requirements and a wider spread between the overnight borrowing and lending rates. After the prior policy meeting at the Central Bank of the Republic of Turkey on July 21, officials warned that policy may have to be eased if global economic problems were to intensify and lead to contracting domestic demand, and today they made good on that promise.
- The one-week repo rate was reduced to 5.75% from 6.25%.
- The overnight borrowing rate now becomes 5.0% versus 1.5% before, which narrows its spread vis-a-vis a 9.0% lending rate to 400 basis points from 750 bps.
- Steps were taken to increase the efficiency of central bank liquidity management and to facilitate a more balanced provision of liquidity across the system.
A released statement called these actions “measured” and necessary to reduce the risk of domestic recession that might be caused by heightened global economic problems.
Copyright 2011, Larry Greenberg. All rights reserved. No secondary distribution without express permission.
Tags: Turkey's central bank
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